Financial difficulties with mortgages

If you’re struggling to pay back your mortgage, it can be a source of real worry, anxiety and stress. It may be the reason for your money worries is upsetting or stressful in itself, such as unemployment or illness. So it’s understandable you might feel anxious about sharing your concerns about money issues with others or that it might be difficult to talk about.

And with rises in inflation and the cost of living, as well as interest rate increases, more people may be worried about keeping up with their mortgage payments. They may already be in financial difficulty and having problems paying.

If you’re worried about keeping up with your mortgage, you should contact your lender first. Your lender may be able to provide you with help and support. And while your lender should contact you when they realise you might in difficulty – for example after a missed payment – the sooner you’re in contact the better.

It’s usually best to speak to your lender before payments are due. And it’s important to remember that there’s no downside to getting in touch with your lender. Discussing your options won’t have any impact on your credit file, for example.

If you’re looking for debt advice or are worried about money and finding it difficult to know where to start, the government-backed MoneyHelper service can help you find a way forward.

We can look at complaints about financial difficulties affecting your ability to repay your mortgage. This includes complaints about advice you received from a financial business, complaints about mortgage arrears and charges, or not being able to change or move your mortgage or take a payment holiday. We can also investigate complaints about repossession, before possession takes place or after it has happened.

People get in touch with us about a variety of situations and tell us:

• I can’t afford my mortgage payments and my mortgage lender won’t help me
• my lender wouldn’t agree to something I asked for, such as a switch to a different mortgage product or interest rate, or a term extension
• I’m unhappy with action the lender is taking – for example, phone calls or letters about missed payments or court action
• the lender is harassing me about missing payment or my arrears – they keep calling me or sending me letters
• I don’t think the charges applied to my account are fair – this could be about arrears fees, or legal costs
• I’m trapped with my mortgage lender, or stuck with its standard rate
• the lender is trying to repossess my house and I don’t think it’s fair

These are some of the things we hear about, but if you don’t see your complaint in the list above, you can still get in touch with us and see if we can help.

We expect mortgage lenders to listen to their customers and treat them fairly, and there are rules and approaches they’re expected to follow to help customers in financial difficulty.

If you’re in financial difficulties, you need to speak to your lender first. This gives you and your lender the chance to see how they may be able to support you and avoids letting the situation get worse.

If you remain unhappy with what they say, or don’t think they have treated you fairly, you can complain to the financial business. They should look into things and reply within 8 weeks. If you’re not happy with their response, or they don’t get back to you within 8 weeks, you can bring your complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.

Find out more about how to complain. 

To help us consider a complaint fairly, we’ll ask you to provide some information. We’ll make our decision about what happened using evidence provided by you, the financial business and any relevant third parties.

When we look at complaints like this, we’ll consider:

• the legal and regulatory standards, and relevant industry best practice - we’ll also look at the terms and conditions of your mortgage

We’ll also consider whether your lender:

• responded fairly and constructively when you told them you were having difficulties
• listened to you and took your individual circumstances into account
• listened to any realistic plans you had to get the mortgage back on track
• took into account the extra guidance on the impact of the Covid-19 pandemic – if your financial difficulties happened during 2020 and 2021, while the guidance was in force
• took into account the Mortgage Charter agreed in 2023, along with the FCA’s guidance, if your complaint is about financial difficulties that happened after the charter came into force

When your lender was responding to you and making decisions, we’d expect them to ask you about your circumstances so that they had all the relevant information. We’d look to see that they asked you about your situation and when and if the situation was likely to improve. We’d also look to see that you and your lender had been open and willing to work with each other to come to a reasonable and fair solution.

Financial impact of increases in interest rates and the cost of living

With rises in inflation and interest rates, more people may need to speak to their lender about their mortgage. This could be with questions about what to do, or worries about making payments. 

Following discussions between government, the Financial Conduct Authority (FCA) and mortgage lenders, extra help for borrowers is in place.

From 30 June 2023, if you’re up to date with your mortgage but are worried about future payments, you can ask your lender to:

• Switch your mortgage to interest only for up to six months. This won’t impact your credit file. But after the interest-only period, your mortgage payments are likely to increase to make up for the missed amount.
• Extend the term of your mortgage without doing an affordability assessment, provided it doesn’t go past your retirement age. You can switch the term back within six months, again without an affordability assessment. This won’t impact your credit file.

And from 10 July 2023, if you’re coming to the end of a fixed interest rate period and are worried about rising interest rates, your lender can offer a new rate up to six months before your old one expires. You can change your mind if rates go down. To access this, your lender needs to have signed up to the Mortgage Charter.

If you’ve already missed payments, any help you receive will impact your credit file. But your lender should still be thinking about what support it can provide. They should work to understand your individual circumstances. This means you’ll need to give information about your finances and other issues, such as any medical problems that impact your ability to pay.

Any support offered should be tailored to your own circumstances, helping you to get things back on track. This includes allowing some breathing space, if appropriate. Examples of what your lender should be thinking about include:

In some generally rare cases, a lender may have offered all the support they can, but your circumstances have changed in a way that means you still can't get the mortgage on track. In these cases, a lender might think about repossessing the property.

But repossession should always be a last resort. Lenders who are signed up to the Mortgage Charter have agreed not to repossess until at least 12 months after you first miss payments, with effect from 26 June 2023.

And even then, we’d usually expect your lender to come to an arrangement with you, such as giving you reasonable time to sell the property yourself before repossession.

If we decide you’ve been treated unfairly, or that the business has made a mistake, we’ll ask them to put things right. Our general approach is that you should be put back in the position you would have been in if the problem hadn’t happened. We may also ask the business to compensate you for any distress or inconvenience you’ve experienced as a result of the problem.

The exact details of how we’ll ask the business to put things right will depend on the nature of the complaint, and how you lost out.

If you're in financial difficulties, there are many organisations and services available to offer advice and support: 

• The government-backed Money Advice Service can help you find a way forward with debt-advice and guidance on financial difficulties.
• StepChange is a free debt charity that can offer support and advice about debt

If you’re a financial business, we have information on this topic on its own page in the businesses section of our website.